November 2013 Ethanol Producer Magazine

Page 1

INSIDE: CELLULOSE PRIMER OUTLINES BIOMASS-TO-FUEL CHALLENGE NOVEMBER 2013

Fuel and Power Under the Florida Sun Ineos Bio Showcases New Facility Page 30

www.ethanolproducer.com

PLUS

MSW Projects Near Finish Line Page 38

World’s Largest Cellulosic Plant Inaugurated Page 44


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NOVEMBER 2013 | Ethanol Producer Magazine | 3


CONTENTS

NOVEMBER ISSUE 2013 VOL. 19 ISSUE 11

FEATURES

DEPARTMENTS

30

6

Editor’s Note

7

Ad Index

Commissioning a First-of-a-Kind Plant Takes Time BY TOM BRYAN

10 The Way I See It

Corporate Profits vs Environmental Prophets BY MIKE BRYAN

11 Events Calendar

Upcoming Conferences & Trade Shows

12 View From the Hill

PROFILE

Ineos Bio turns vegetative waste into ethanol and power in minutes BY SUSANNE RETKA SCHILL

14 Drive

A Waste-Filled Proposition

38

44

Let’s Talk Thanksgiving, Transportation BY BOB DINNEEN The Facts Never Lie BY TOM BUIS

16 Grassroots Voice

ACE Conference Highlights

Industry Advocates BY BRIAN JENNINGS

18 Europe Calling

Is the ILUC Soap Opera

Nearing Its Finale? BY ROBERT VIERHOUT

20 Business Matters

FEEDSTOCK

Trash to Bio-Treasure

MSW-to-biofuel projects keep garbage out of landfills BY HOLLY JESSEN

INAUGURATION

Industry First

A cellulosic ethanol facility in Northern Italy has reached commercial-scale production levels BY HOLLY JESSEN

CONTRIBUTION

Are You Exporting Without

an IC-DISC? If So, Why? BY CHRISTOPHER L. NUSS

22 Business Briefs 24 Commodities Report 26 Distilled 50 Marketplace

50 POLICY Demystifying Cellulose

Primer explains reducing cellulose to its raw components for conversion BY SCOTT MOWREY CORRECTION The “Field-Grown Enzymes” article in the October issue incorrectly referred to energy corn, in one reference, when it should have read Enogen corn. Ethanol Producer Magazine: (USPS No. 023-974) November 2013, Vol. 19, Issue 11. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

4 | Ethanol Producer Magazine | NOVEMBER 2013

ON THE COVER

Indian River BioEnergy Center reached commercial production this summer.

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL


NOVEMBER 2013 | Ethanol Producer Magazine | 5


EDITOR’S NOTE

This month, we catch up with four large-scale cellulosic ethanol plants, three of which are among the first in the world to finish construction. These early-to-market producers are notably

COMMISSIONING A FIRST-OF-A-KIND PLANT TAKES TIME TOM BRYAN, PRESIDENT & EDITOR IN CHIEF TBRYAN@BBIINTERNATIONAL.COM

unique. Their technology platforms and production inputs are as dissimilar as their geographic locations and corporate structures. Nevertheless, their commonalities emerge thematically in this month’s feature lineup. Starting with our page-30 cover story, “A Waste-Filled Proposition,” we are introduced to the crucial role that waste-to-ethanol plants can play in mitigating a growing worldwide community need—waste diversion. Ineos New Planet BioEnergy LLC is getting paid to divert vegetative and wood waste from a space-constrained landfill in Florida, writes Sue Retka Schill, EPM senior editor. In the feature that follows, “Trash to Bio-Treasure,” Holly Jessen, EPM managing editor, reports on two other waste-to-ethanol producers: Enerkem in Alberta and Fiberight in Iowa. Again, we see that tipping fees are, or will be, paid to each producer by the cities supplying them with waste. While materials separation and waste conversion challenges are difficult beasts, taming them may deliver a huge prize. Landfills are simply running out of space and municipalities from all over the U.S. are expressing interest in Fiberight. Ineos, too, is getting “inquiries from all over the world.” If the value proposition of waste diversion is the principal thread in this month’s issue, the challenge of commissioning novel industrial facilities is the second. Plant commissioning, put simply, is the process of assuring that all of the plant’s systems and components are designed, installed and functioning the way they’re supposed to. Retka Schill visited the Ineos Bio facility in person in August. She returned from Florida with new insight about how large chemical companies define and carry out plant commissioning. She informs us that the pre-startup “shakedown” that once took a new corn-ethanol plant a month may take a cellulosic ethanol plant a year or more. In Northern Italy, Beta Renewables—long done with construction—celebrated official plant opening on Oct. 8 (see photos on page 44). Like Ineos, Beta Renewables was in the tedious throes of commissioning for months. Up north, farther from the finish line, Enerkem is also approaching project completion but just entering its own commissioning process. The takeaway: Commissioning first-of-a-kind cellulosic ethanol plants is a meticulous, time-consuming process. Startup isn’t what it used to be, but neither are the stakes. If old feedstock and technology rules no longer apply to new ethanol plants, neither should old expectations about the pace of bringing the facilities on line.

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US:

6 | Ethanol Producer Magazine | NOVEMBER 2013

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AdIndex

EDITORIAL PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com

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VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com

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MANAGING EDITOR Holly Jessen hjessen@bbiinternational.com

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SENIOR EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

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NEWS EDITOR Erin Voegele evoegele@bbiinternational.com

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48 Clariant Produckte (Deutchland) Gmbh

17 Syngenta: Enogen

13 DuPont Industrial Biosciences

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41 Verenium

27 Fagen Inc.

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Mike Bryan mbryan@bbiinternational.com

CEO Joe Bryan jbryan@bbiinternational.com

SALES VICE PRESIDENT OF OPERATIONS Matthew Spoor mspoor@bbiinternational.com

BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com

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CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

EDITORIAL BOARD Mike Jerke, Chippewa Valley Ethanol Co. LLLP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy LLC Keith Kor, Pinal Energy LLC Walter Wendland, Golden Grain Energy LLC Neal Jakel Illinois River Energy LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to hjessen@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/ or space.

Please recycle this magazine and remove inserts or samples before recycling

5 Fermentis - Division of S.I. Lesaffre 35 Gamajet Cleaning Systems, Inc.

34 Wabash Power Equipment Co.

43 West Salem Machinery

2 Growth Energy

23 Himark bioGas

COPYRIGHT Š 2013 by BBI International TM

NOVEMBER 2013 | Ethanol Producer Magazine | 7


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Another all-sugar fermentation option: Version 2.1, which integrates the front end of the Inbicon process with the back end of your grain plant. We’ve logged 15,000 hours at our Kalundborg demonstration plant preparing the way for commercialization. We’re ready to start working with you today planning the co-location. Laying out a roadmap with budgets, timetables, and process guarantees. Evaluating the options that will give you the best business case for your individual operation. Opening the road to project development and construction that can have you pumping The New Ethanol in 24 to 36 months, depending on the platform. For global inquiries, contact Inbicon at +45 99 55 07 00 or info@inbicon. com. In North America, contact Leifmark, Inbicon’s marketing partner, at 717 626 0557 or info@leifmark.com.

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NOVEMBER 2013 Ethanol Producer Magazine 9

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THE WAY I SEE IT

Corporate Profits vs Environmental Prophets By Mike Bryan

The latest study by the Intergovernmental Panel on Climate Change says a “hot world is a hungry world.” Unfortunately, global warming has become a political issue rather than a science issue and is based more on economics than logic. Because no matter the degree of temperature rise, no matter to what extent humans are to blame, anything we can do to try and mitigate either of those two effects is to our benefit. It’s not as though we need to do years more research to try and determine where the pollution is generated. We know where the pollution is originating and what’s causing it. To not impose strict regulations to minimize the emissions from known sources is environmentally irresponsible and is often being ignored simply because of profits. I like profit, it’s what makes the world go around at least on an economic scale. I also like to breathe clean air and want to know that as world inhabitants we are doing everything we can to protect our environment for future generations. Unfortunately, when it comes down to corporate profits vs. environmental prophets, corporate profits

10 | Ethanol Producer Magazine | NOVEMBER 2013

are currently leading on the environmental scoreboard. One of the problems is that the places on earth with the least profits are the very places that the prophets predict will be the most effected. “As temperatures climb and oceans warm, tropical and subtropical regions will face sharp changes in annual rainfall, says the IPCC report. “East Africa can expect to experience increased short rains, while West Africa should expect heavier monsoons. Burma, Bangladesh and India can expect stronger cyclones; elsewhere in southern Asia, heavier summer rains are anticipated.” Governments around the world need to begin basing their climate change policies less on the advice of profit-oriented industry and more on the predictions of global scientists. Call me a cynic, but I have a difficult time believing the public relations spokespersons for industry who suggest that this whole climate change thing is a hoax and call into question the collective judgement of 97 percent of the scientific community. The ethanol industry has known for decades that what

we do contributes to a cleaner environment. The oil industry can’t make that claim, we can. We may not be a panacea for stopping global warming, but we are far better at contributing towards the reduction of CO2 than fossil fuels. For that we can, and should, be immensely proud. So while we all like corporate profits, we need to start heeding the environmental prophets and as a global community do the right thing. It may sound utopian, but it’s high time government, industry and community began working together to address global warming and stop this nonsense of denial. That’s the way I see it.

Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com


EVENTS CALENDAR National Ethanol Conference February 17-19, 2014 JW Marriott Orlando Grande Lakes Orlando, Florida

Since 1996, the RFA’s National Ethanol Conference has been recognized as the preeminent conference for delivering accurate, timely information on marketing, legislative and regulatory issues facing the ethanol industry. With numerous networking opportunities, more business meetings are conducted and contacts made at this conference than any other ethanol conference. 202-289-3835 | www.nationalethanolconference.com

International Biomass Conference & Expo March 24-26, 2014 Orange County Convention Center Orlando, Florida

Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. This event is the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com

International Fuel Ethanol Workshop & Expo June 9 -12, 2014 Indiana Convention Center Indianapolis, Indiana

Now in its 30th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-tobusiness environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. 866-746-8385 | www.fuelethanolworkshop.com

National Advanced Biofuels Conference & Expo October 13-15, 2014 Hyatt Minneapolis Minneapolis, Minnesota

Produced by BBI International, this event will feature the world of advanced biofuels and biobased chemicals— technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. With a vertically integrated program and audience, this event is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleumderived products. 866-746-8385 | www.advancedbiofuelsconference.com


VIEW FROM THE HILL

Let’s Talk Thanksgiving, Transportation By Bob Dinneen

Thanksgiving is rapidly approaching and with it comes friends, family and food. As families begin to prepare for the big meal, the grocery store displays large piles of turkeys in all different shapes and sizes. If I broke on the right side of the wishbone, I would wish that Americans would know the truth about the negative impact of Big Oil on food prices and the positive impact of ethanol on reducing transportation costs. Oil and energy costs are the leading cause of food price increases at the grocery store, not ethanol. On average, food travels 1,500 miles from the farm to the local supermarket. When breaking it down, only 16 cents of every dollar spent on food is spent on the actual agricultural ingredients. The rest of the dollar is spent on packaging, transporting, marketing and getting it to the grocery store, which requires oil and energy. This claim is backed up by the World Bank, which released a study in May finding that oil is, in fact, the primary culprit behind food

12 | Ethanol Producer Magazine | NOVEMBER 2013

price spikes. The report concluded that “… most of the [food] price increases [from 1997-2004 to 20052012] are accounted for by crude oil prices (more than 50 percent). … Crude oil prices mattered most during the recent boom period because they experienced the largest increase.” Additionally, when comparing the United Nations Food Price Index and World Crude Oil prices, there is a near perfect correlation. Thanksgiving often has large meals and food, but that isn’t the real basis of Thanksgiving. Thanksgiving is a time to spend with family and loved ones which, to many, includes a substantial amount of travel. Some take planes, some take trains, but many take automobiles, and with that comes a large expense, the cost of gasoline. AAA predicted that more than 39 million people would be traveling an average of 588 miles during last year’s Thanksgiving holiday. Add that up and it makes for a very expensive holiday season. Here is where ethanol comes

into play. According to a recent analysis by energy economist Philip K. Verleger, ethanol production has saved consumers an average of $1 per gallon at the pump in 2012 and 2013. I know that many people nationwide have to decide if the cost is worth the trip, but with lower gas prices due to ethanol, the decision becomes easier and more people will be reunited with family and old friends. While the petroleum industry is causing rising food prices, ethanol is saving drivers money at the pump and that is truly something to be thankful for. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835


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DRIVE

The Facts Never Lie By Tom Buis

It’s no secret that Big Oil and its allies have and will continue to do anything and everything to discredit the ethanol industry. Time and again these groups have disseminated misleading information and outright distortions in attempts to deceive the American public, protect their market share and, ultimately, their bottom line. But, when you take a good look at the whole picture, it’s clear. The facts don’t lie and the misinformation thrown at the biofuels industry is being picked apart by the truth. Big Oil has been pushing back on E15, saying it will damage engines and that consumers don’t even want it. Nothing could be further from the truth. In fact, a recent poll conducted by Fuels America, a coalition including Growth Energy, shows that there is an overwhelming desire for renewable fuels. Conducted in late September, the poll shows that 82 percent of U.S. consumers support having E15 at their local gas stations. Furthermore, for the retailers who have introduced E15 to their consumers, it has quickly become a customer favorite, with many retailers saying that their new E15 sales make up approximately 30 percent of their entire fuel sales. The oil industry has attacked the safety of E15 as well, going so far as to launch national advertisements (with actors masquerading as mechanics) based on the false premise that E15 will damage your engine. The proof? An oil-funded study conducted with no

14 | Ethanol Producer Magazine | NOVEMBER 2013

scientific basis whatsoever that used dubious technical assumptions. In fact, only eight vehicles were tested and one even failed running on pure gasoline. This led the U.S. DOE to publish a blog to counter oil’s findings, stating that the agency believes “the study is significantly flawed.” Big Oil also wants you to believe that E15 results in dramatically lower gas mileage. This is simply not true. Any mileage loss is negligible and is substantially offset by the price reduction. Furthermore, the oil industry wants you to believe that E15 is a mandate, that consumers would be forced to fuel up with this blend. This couldn’t be further from the truth. E15 has always been about consumer choice, offering an alternative at the pump that is otherwise not available. Big Oil claims it needs to eliminate the renewable fuel standard (RFS) in order to have a competitive marketplace. It already has a near monopoly on the current fuels dispensed and the industry wants to make sure it stays this way. This battle is about market share, plain and simple. Just this year, the five biggest oil companies earned an astonishing $145,000 in profits per minute! To put that in perspective, that is nearly three times the median household income of Americans, which is $52,762 per year. Yet the industry still goes out of its way to block market access for ethanol. Why? They will do anything to prevent competition in the marketplace. Big Oil has also teamed up with Big Food to paint the picture that the ethanol industry is driving up food prices, which is an outright distortion of reality. While feed costs have increased

over the past few years, during the same time frame, the food industry has both covered its feed costs and pocketed nearly $8 billion a year in additional income. The poultry industry alone has made huge profits largely thanks to increased margins. In the past four years, retailers increased their margins by more than 11 cents per pound per year over and above the price they paid the farmer who incurred all the production costs. Want more proof? From 2009 through this past May, the Consumer Price Index for food has increased 8.7 percent, tracking pretty closely to the 7.8 percent increase in the index for all items. Yet, during this same time frame, gasoline prices rose 38.4 percent. This increase further supports the recent World Bank study that identified energy costs as the driving force for more than 50 percent of the increase in food prices worldwide. The study also demonstrated that agriculture commodity prices had little impact on consumer food prices. I could continue, correcting more and more of oil’s tricks with cold hard facts, but I think I’ve made my point. Let’s hope Americans can see through Big Oil’s web of deception, see the facts and understand the truth about ethanol and the liquid fuels market. It’s time for Americans to have the choice of a clean, green homegrown American fuel that provides them with a choice and savings at the pump. Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org


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GRASSROOTS VOICE

ACE Conference Highlights Industry Advocates By Brian Jennings

The American Coalition for Ethanol recently hosted a successful ethanol conference in Des Moines, Iowa. Our conference, developed with input from ACE members, focused on policy, innovation, marketing, and profitability. We discussed how to win the renewable fuel standard (RFS) battle, efforts to increase the use of E15 and E85, and technology innovations being developed to improve profitability in the industry. With an eye toward the future, we also had a top U.S. automaker discuss the role ethanol’s octane can play in advanced engine technologies. But what I enjoyed most about the conference is that we recognized several ACE members for the proactive steps they are taking to advance and promote ethanol. We put the spotlight on people who don’t seek or desire the attention, but deserve it for their leadership. For example, Ron Alverson with Dakota Ethanol, who is our board president, is passionate about the fact that corn ethanol does much more to reduce lifecycle greenhouse gases than what it gets credit for. Ron is pioneering an effort to help regulators appreciate the beneficial role ethanol can play in reducing carbon emissions. We highlighted Delayne Johnson and Travis Brotherson of Quad County Corn Processors who developed a technology breakthrough in their research laboratory to convert corn kernel fiber into cellulosic ethanol, an innovation that is being commercialized at their plant today. When it comes to our effort to win the RFS battle, some ACE members stand

16 | Ethanol Producer Magazine | NOVEMBER 2013

out as leaders who have gone above and beyond the advocacy call-of-duty. For example, Chippewa Valley Ethanol Co. is the first that comes to my mind. CVEC has sent more people to the ACE fly-in over the years and been more actively supportive of advocacy efforts than any other ethanol plant I can think of; they are making a positive difference. At the other end of the country, Pinal Energy has been proactive about communicating the benefits of the RFS to the Arizona congressional delegation. Many ACE members have taken the initiative to help overcome the blend wall and increase market access for ethanol. Glacial Lakes Energy has been promoting E30 and E85 for years, and recently began hosting Flex Fuel Fridays in their area to increase sales of higher ethanol blends. Little Sioux Corn Processors and Siouxland Ethanol have both helped retailers in their area install blender pumps to sell higher blends. Other ACE members stand out as leaders for being proactive with the media or for engaging and educating the public. Ace Ethanol, Adkins Energy, Big River Resources, KAAPA Ethanol and Mid-Missouri Energy have all taken the initiative to educate the media about the benefits of ethanol. Dave Sovereign and other leaders at Golden Grain Energy, Homeland Energy Solutions, Absolute Energy and Big River Resources launched the Biofuels Mobile Education Center a few years ago. And Gene and Kathy Griffith and their team at Patriot Renewable Fuels have become particularly effective at raising awareness about the benefits of ethanol on social media.

While we didn’t have enough time at our conference to spotlight the efforts of every member, we singled out these leaders to remind everyone that the sharpest minds and most effective advocates of the industry are the hard-working men and women represented by the ACE grassroots network. We’re going to win the RFS battle in Washington this year, not because we’ll spend more money than oil companies, but because our members’ advocacy has made a positive difference on Capitol Hill. That’s how we enacted the RFS in the first place, and that’s how we’ll keep it intact in Congress. Consider the fact that RFS repeal is off the table and momentum is stalling on opponents’ so-called reform efforts. Make no mistake, changes will be made to the RFS, but those changes will be made by the U.S. EPA, not Congress. Oil companies are asking EPA to reduce the RFS below 10 percent of gasoline demand and EPA has said it’s likely to reduce the advanced and total levels for 2014, so we’ll remain engaged with EPA to ensure these decisions are thoughtful and informed. The truth is change doesn’t come from Washington. Change comes to Washington thanks to the advocacy of people who belong to groups like ACE. Thank you for your leadership and support. Author: Brian Jennings Executive Vice President American Coalition for Ethanol 605-334-3381 bjennings@ethanol.org


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NOVEMBER 2013 | Ethanol Producer Magazine | 17


EUROPE CALLING

Is the ILUC Soap Opera Nearing Its Finale? By Rob Vierhout

It took almost three years for the European Commission to put a bill on the table of the European Parliament and European Union Council of Member States to regulate the indirect effects of land use change (ILUC) caused by the EU biofuel policy. It took that long because there was deep disagreement within the European Commission on whether to use very much disputed science on ILUC as a basis for building on policy and rules. Time pressure forced the Commission to hammer out a “compromise” in which the two most involved Commission services agreed to disagree and wrote their favorite wishes in the bill. What the Commission sent to the legislators was a potpourri of different agendas. It was a mess and the whole discussion has continued to be messy since then, with the Commission very much internally divided on the issue. The main reason for releasing a bill was time constraint. In the EU, adopting a bill takes at least 12 months. With the Parliamentary elections of May 2014 on the horizon, it is already challenging to issue a bill in October 2013. Now, almost one year after the bill was released, the EP has spoken and the outcome was predictable, disagreement to the core. In fact the EP was just echoing the disagreement seen in the Commission. Furthermore, the third and most powerful EU institution, the Council of Ministers, is also in total disagreement. Since the day the Council started discussing the bill, the disagreement became obvious.

18 | Ethanol Producer Magazine | NOVEMBER 2013

The EP has proposed amendments to the bill, many of which are confusing, contradictory or overly detailed and complicated to implement. Of the many hundreds of amendments proposed, those adopted were almost all carried by a slim majority of the voting members (about 10 percent of the members did not participate in the vote). For the Parliament this is the worst possible outcome, starting negotiations with the two other institutions knowing that only a very few amendments were carried with absolute majority (that is, a majority of the total number of its members). If they wish to do this, effectively, the other two institutions can simply ignore the views of the Parliament. Still, the negotiation process is rather opaque, known to be driven largely by the wheeling and dealing conducted by only a few people. But the Parliament also made a decision that very much undermines the possibility of a quick fix. The member of the Parliament in charge of the bill (the rapporteur) was denied a negotiation mandate for as long as it takes for the Member States to reach a common position on the bill. This means that the process is effectively delayed by several months. The Parliament’s rapporteur now needs to sit and wait until the Council is ready to receive her. As the EU Treaty does not put any deadline on the first reading stage of the bill it could take forever. As a result, the Council may lose its appetite for bringing this file to a quick conclusion. The fact that the Member States are so divided on the issue doesn't help either.

If there is no common stance by April next year the bill will go into the freezer. The new Parliament and the new Commission appointed by the end of 2014 can then decide to defrost the bill or to put it in a coffin. The latter would mean game over and business as usual, a likely scenario, according to many stakeholders. Most remarkably, nongovernmental organizations (NGOs) are among the loudest shouters, calling for a speedy agreement. Their main argument, to avoid uncertainty for industry. One of the leading environmental NGOs writes in its newsletter that “delays in the final agreement create further uncertainty for the industry.” You must have nerves to say this. First NGOs have been campaigning aggressively against biofuels, resulting in a bill that is perceived by industry as a U-turn in policy. The immediate effect was a stop to all investments and uncertainty about what future would have in store. And now the NGOs that caused the problem in the first place are saying that no new law will create further uncertainty. I would argue the opposite, no new legislation means maintaining the 10 percent target and certainty at least for the next six years. If the Council does not make substantial progress in the coming two months the file is as good as dead, meaning the end of the ILUC soap opera for several years. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org


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NOVEMBER 2013 | Ethanol Producer Magazine | 19


BUSINESS MATTERS

Are You Exporting Without an IC-DISC? If So, Why? By Christopher L. Nuss

If you’re exporting goods without an Interest Charge Domestic International Sales Corporation, you’re likely paying more income tax than necessary. By implementing a rather simple, low-risk tax planning strategy, you could realize significant tax savings on foreign sales. For individuals, directly or indirectly through pass-through entities such as limited liability companies or S corporations, an IC-DISC may reduce the tax rate on export profits from the ordinary income tax rate to the dividend rate—a savings on tax rates of up to around 16 percent—each year, with such savings being currently “permanent” (at least until Congress changes the law). Similarly, closely held C corporations can also benefit from implementing an IC-DISC with what essentially becomes a taxdeductible dividend. IC-DISCs can also aid in wealth transfer or executive compensation arrangements for the exporter. An IC-DISC is a corporation formed under state law that: • Has a single class of stock. • Maintains minimum capitalization of $2,500. • Has qualified export receipts and qualified exports assets. • Elects to be taxed as an IC-DISC. If all of these requirements are met, an IC-DISC is not subject to federal (and many states’) income tax on commission payments received from the exporter. Instead, the IC-DISC shareholders are typically taxed on the distribution of those payments as dividends. To qualify as an IC-DISC, at least 95 percent of its receipts must be from 20 | Ethanol Producer Magazine | NOVEMBER 2013

selling or leasing “export property.” Property that is, one, manufactured, produced, grown, or extracted in the U.S. by a person other than an ICDISC, two, held primarily for sale in the ordinary course of business for use outside of the U.S., and, three, not more than 50 percent of its value is comprised of imported materials. This does not require that 95 percent of the exporter’s receipts be from exports. It simply requires that the IC-DISC be paid by the exporter based on export sales. Through agreements between the exporter and the IC-DISC, it can be ensured that the IC-DISC is paid based only on qualified export receipts. Note that there are certain types of property that do not meet the definition of export property, such as most intellectual property and products that deplete like oil, gas, and coal, which should not include typical ethanol manufacturing. Assuming the exporter is taxed as a pass-through entity that wholly owns the IC-DISC, the entity exports the goods and pays the IC-DISC a commission based on those export sales that is deductible for income tax purposes and not taxed to the IC-DISC. Then, the IC-DISC distributes back to the exporter that same amount, which passes through to the exporter’s shareholders and is taxed to them at the dividend rate, not the ordinary income tax rate it otherwise would have been without involving the IC-DISC. The amount of the “commission” cannot exceed 50 percent of the export taxable income or 4 percent of export gross receipts. In determining export taxable income, certain direct and indirect expenses can be allocated

and apportioned between export and nonexport activities to maximize tax savings under formulas that generally avoid the risk and uncertainty of IRS transfer pricing rules. Further, to determine export taxable income, there is flexibility in how sales are categorized—for example, by product line or even by transaction—to optimize the commission calculation, thus, optimizing tax savings. Unlike other tax planning strategies, the IRS recognizes that IC-DISCs are not required to have economic substance, (e.g., have its own employees and operations) generally because of the desire to incentivize the export of U.S.manufactured goods. Given that, however, care must be taken to ensure that all legal and technical requirements are met to qualify as an IC-DISC. An IC-DISC is not difficult to form with the help of experienced legal counsel, and is not overly burdensome, especially given the immediate tax savings that can be realized. Note that this article is intended to be a general overview and not a comprehensive analysis of IC-DISC law. Moreover, it does not constitute legal advice. Competent legal counsel should be consulted to apply the relevant legal requirements of a specific situation. Author: Christopher L. Nuss Attorney, BrownWinick Law Firm 515-242-2432 nuss@brownwinick.com


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nationalethanolconference.com NOVEMBER 2013 | Ethanol Producer Magazine | 21


BUSINESS BRIEFS

People, Partnerships & Deals

Greenbelt Resources Corp. has appointed Joseph Pivinski to its executive team as interim chief financial officer. One of his first tasks is to update the company’s financial statements reported via OTC markets. Pivinski previously served as chief financial officer and senior vice president of Consolidated Water Co. Ltd., and as vice president of finance and chief financial officer of Oriole Homes Corp.

Michael Best & Friedrich LLP announced Cameron Field has joined the firm’s Environmental Practice Group in its Madison, Wis., office. Prior to joining Michael Best & Friedrich, Field Field has a strong background in worked as a summer environmental law. law clerk in 2012 with Earthjustice and in the fall of 2012 as a legal intern for the U.S. Department of Justice’s environmental enforcement section. From 2011 to 2013 he was a research associate with the U.S.-China Partnership for Environmental Law and in 2013 worked as a student clinician with the Environmental and Natural Resource Law Clinic at Vermont Law School.

marketing at Inbicon. As a partner of technology with Leifmark, he is now responsible for the transfer of Inbicon technology for commercial licensing in North American projects. Andersen, also a former member of Inbicon’s sales and marketing team, now serves as partner of alliances with Leifmark, where he will establish and maintain relationships with key industry partners, accelerate agreements that allow projects to move forward and help manage the transition across economic and legal barriers between North America and Denmark.

Greg Roda has joined Gevo Inc. as chief commercial officer. In this role, he will be responsible for all business development activities for the company. Roda has more than 17 years of leadership, business Roda has experience in biobased materials development, research, and product developdevelopment. ment experience in biobased materials. He previously served as CEO of Outlast Technology Inc., and as a business development executive at NatureWorks, where he oversaw commercialization of polylactic acid in the fiber and textile industry. He has also worked for Cargill.

Esteban Chornet, co-founder and chief technology officer of Enerkem Inc., was recently presented with the 2103 Don Klass Award for Excellence in Thermochemical Conversion Science. The award, a Morgen was part Chornet (center) Anderson helped tribute to one of the origof the team that receives the 2013 Inbicon establish inal founders of the Bioadvanced Inbicon’s Don Klass Award a partner strategy mass Energy Research biomass technology from the Gas and assisted in the to the commercial Technology Institute. Association, recognizes certification of North stage. American engineering Chornet’s pioneering firms. technology innovations in the field of bioenChristian Morgen and Jesper Bang ergy. Andersen have joined Leifmark LLC as Superior Industries Inc., a North partners. Leifmark is an independent partner of Inbicon A/S that is authorized to market American-based manufacturer of conveyor Inbicon Biomass Refinery technology in North systems and related components, recently America. Morgen and Andersen are former added Terin Louis and Matt Wulf as new Inbicon executives. Morgen previously served conveyor components territory managers in as general manager for international sales and the Northeast and Midwest United States, re-


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spectively. Louis joins outside sales following five years of service with the company’s engineering department. Wulf previously worked in customer service and sales estimating in the company’s conveyor components division. The Iowa Renewable Fuels Association has announced that Poet-DSM Advanced Biofuels LLC has joined its membership. Poet-DSM is developing Project Liberty, a 25 MMgy cellulosic ethanol plant in Emmetsburg, Iowa. Cultura Technologies Inc. has added new offerings to its enterprise suite of solutions to the agri-food industry with its acquisition of E-Markets Inc., which offers a suite of agronomy, grain and biofuels enterprise resource planning software solutions to customers. The suite of product solutions includes ordering, price risk management, inventory management, preseason order gathering, procurement, identity preserved contracting, and traceability solutions for the agribusiness industry. Fluid Quip Process Technologies LLC has announced the sale of a Selective Grind Technology system to United Wisconsin Grain Producers to increase ethanol and oil yield at the facility. The system will be the first to utilize a Fluid-Quip 40-inch disc mill. The FWPT SGT lineup also includes 36-inch single discs, 36-inch double discs, and 52-inch discs in full-scale operation, along with various grind plate designs that are used to tailor the SGT system to meet plants’ needs.

SHARE YOUR INDUSTRY BRIEFS To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to 701-746-8385, or email it to evoegele@ bbiinternational.com. Please include your name and telephone number in all correspondence.

Airgas Inc. has announced that its subsidiary Airgas Carbonic has signed a longterm agreement for the supply of liquid carbon dioxide from Fox River Valley Ethanol’s recently acquired plant in Oshkosh, Wis. Under the terms of the agreement, Airgas Carbonic will market food and beverage-grade CO2 coproducts from the plant, which is expected to yield 250 tons per day of liquid CO2. Novozymes has entered into a collaboration agreement with Raízen Energia S/A, the largest sugarcane crusher in Brazil. Under the agreement, Novozymes will supply enzyme technology to Raízen’s first commercialscale Brazilian cellulosic ethanol plant, which is scheduled to be operational next year. The plant will be a bolt-on facility to Raízen’s Costa Pinto sugarcane mill in the state of São Paulo. The 40 million liter per year cellulosic plant will convert sugarcane bagasse and straw into ethanol. The agreement also provides for Novozymes to supply enzyme technology to the company’s second cellulosic plant, should one be constructed.

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Green Biologistics Inc., a Gahanna, Ohio-based biochemicals company, and Little Falls, Minn.-based Central MN Ethanol Co-op have announced that Green Biologistics has entered into an exclusive letter of intent to acquire substantially all of CMEC’s assets. The transaction is expected to close next year.

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Gamajet has announced the development of the Gamajet Bullet IV to target the cleaning of sludge, oil and residual debris that collects at the bottom of large tanks, open-top tanks, process vessels and trailers. The Gamajet Bullet IV rotates in a tight 105 degree downward patter, with high-impact water jets scouring the bottom area of the tank, with no oversplash.

R.C. Costello & Associates Inc. and Zeton Inc. recently signed a memorandum of understanding to provide a customized end-toend solution that spans from feasibility studies, process simulation, front-end engineering through detailed design, procurement, fabrication and factory testing. Costello has extensive front-end engineering experience, processing modeling and design experience. Zeton has specific know-how in the scale up of process technology, specializing in designing and building modular pilot and demonstration plants.

Verenium Corp. has announced it has entered into a definitive merger agreement with BASF Corp., under which BASF will commence a cash tender offer for all of the outstanding shares of Verenium’s common stock. The agreement has been unanimously approved by both Verenium’s and BASF’s board of directors.

The U.S. Bankruptcy Court for the District of Minnesota recently approved the acquisition of the assets of Purified Renewable Energy LLC to its lender West Ventures LLC. With the sale closed, the plant’s name has been changed to Buffalo Lake Advanced Biofuels. The 18 MMgy facility is located in Buffalo Lake, Minn.

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COMMODITIES Natural Gas Report

Shifting weather patterns impact prices Sept. 30—The month of September has been interesting in the natural gas market with unseasonably warm weather causing a late summer run-up in prices. Typically, demand for power peaks in July and consequently, there is higher demand for natural gas, which, along with coal, is used to help cool American homes and businesses. When comparing the weather patterns of 2013 against the historical norm, it can be seen how a relatively cool August and hot September influenced natural gas prices. The chart plots aggregate weekly Total Degree Days for 2013 as well as the 30-year historical norms for TDDs, which gives us a sense of how relatively hot a summer month has been. TDDs are calculated by climatologists by taking the difference between the 65 degrees Fahrenheit and the average temperature over the past 30. The chart also plots the price of natural gas, using the prices from the New York Mercantile Exchange, revealing the relationship between prices and weather and shows why natural gas prices rose in September. In the month of July, when summer demand for gas is typically highest, prices were north of $3.70 per MMBtu. In the following month, temperature dipped below seasonal norms, with only one week above the 30-year average level, and Nymex prices responded, dropping below $3.30 per MMBtu.

BY BEN STRAUS

When the weather pattern shifted in September, weekly TDDs were above normal for a four-week stretch, achieving levels normally experienced in July. This extended run of above-average temperatures pushed Nymex prices back to July levels.

Corn Report

Preliminary yield reports optimistic, but outcome still unknown

BY JASON SAGEBIEL

Sept. 30—The potential of 1.8 billion bushels of corn stocks looms over the horizon with the possibility of a major shift in acres remaining. Preliminary yield reports have been optimistic for corn, however, later planted crops have to yet to offer yields. With production projected at 13.8 billion bushels, demand at 12.6 billion bushels and carry-in from last year at 661 billion bushels (expected to increase with the September stocks report), overall carryout is projected at 1.855 billion bushels. Therefore, the supply/demand table has wiggle room on the supply and production side. The livestock sector is expected to consume 5.1 billion bushels, exports 1.225 billion bushels, ethanol 4.90 billion bushels and other industrial usage 1.45 billion bushels. Feed demand and higher ethanol demand (meaning more coproduct production) would leave room for bigger livestock placements or more coproduct exports. World corn carryout is estimated at 151.42 million metric tons, up from last year’s 122.59. The current world corn-stocks-to-use ratio is 16.3 percent, the highest ratio in three years. The increase in U.S. and world stocks will keep the market upside potential limited barring With the projected carryout in the corn market and inverted etha weather threat in South America. The market anticipates more soy anol markets going forward, ethanol production margins look disapproduction out of that region as crop and currency economics warrant pointing while forward coproduct values look attractive. it. Stay tuned for a perceived bearish October outlook to report U.S. carryout for 2013-'14. 24 | Ethanol Producer Magazine | NOVEMBER 2013


REPORT

Regional Ethanol Prices Front Month Futures (AC) $1.990

($/gallon)

REGION

SPOT

RACK

West Coast

2.335

2.850

Midwest

2.420

2.620

East Coast

2.490

2.920 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

DDGS export demand driving prices for now BY SEAN BRODERICK

Sept. 30—As October approaches, DDGS prices are still reflective of the nearby tightness in old crop corn. While the inverse of old crop DDGS prices to new crop is not as severe as a month ago, the price drop from the beginning to the end of October is still about $15 per ton. The strong demand being seen from bulk and container exports is creating values of corn percentages of more than 110 percent for a lot of plants. This type of value is expected now through the first and second quarters of 2014 and is creating a lot of reformulation in the diets of domestic animals that are being fed. Part of this phenomenon is due to the price of protein throughout the world and the value of it in the DDGS. Or, it could be due to fact that there is not a quota on DDGS in China like there is in corn and the value-added tax, and cost of freight in containers is lower. Also,

overseas buyers have had advantages in buying smaller parcels at near bulk rate prices. All of these are the reasons that export DDGS demand is driving the price. At some point, domestic demand will drop even more than it has the past couple of months. Buyers either can’t, or won’t, pay the premiums that export buyers have been doing. Feeding animals has not been consistently profitable for any of the U.S. meat and milk producers for years and DDGS is seeing more competition from things like corn gluten feed and canola meal. The percentage of corn price strength looks to continue through the first quarter of next year, especially given both the propensity of DDGS to drop more slowly in price and the expected drop in the price of cash corn. Exports are in the driver’s seat, for now.

($/gallon) Front Month Futures Price (RBOB) $2.6762

REGION

SPOT

RACK

West Coast

2.749

2.934

Midwest

2.686

3.639

East Coast

2.699

2.837 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

NOV 2013

OCT 2013

NOV 2012

Minnesota

215

215

255

Chicago

242

255

288

Buffalo, N.Y.

208

255

310

Central Calif.

268

273

327

Central Fla.

267

275

Corn Futures Prices DATE

Ethanol inventories tightening during fall months BY RICK KMENT Sept. 30—Even with cost of production slowly slipping lower due to corn prices hovering around $4.50 per bushel, ethanol inventory levels continue to shrink. The general trend of the market is to push supplies lower, although this movement is very inconsistent from week to week. Lower ethanol production, combined with generally strong product movement following Labor Day is helping to draw buyers back into the market and keeping long-term supplies limited. If this tightness continues to be seen

through the end of the year, additional ethanol market support is likely as buyers try to gain access to more product to meet future demand. But even though ethanol supplies have dropped, moderate price pressure has been seen in both ethanol and gasoline markets over the past month. This could create some back and forth price movement through the fourth quarter. Size and quality of this year's corn crop will have a major impact in ethanol price direction in the next six months.

(Dec. Futures, $/bushel)

HIGH

LOW

CLOSE

SEPT 27, 2013

4.59

4.53

4.54

AUG 27, 2013

5.04 1/4

4.85 1/2

4.86 1/4

SEPT 27, 2012

7.26 3/4

7.11 3/4

7.16 1/4 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

Ethanol Report

310 SOURCE: CHS Inc.

SEP 27, 2013

AUG 30, 2013

SEP 20, 2012

Superior, Neb.

4.24

5.32

6.96

Beatrice, Neb.

4.14

5.42

6.91

Sublette, Kan.

4.24

5.68

7.05

Salina, Kan.

4.42

5.32

7.11

Triangle, Texas

4.37

5.80

7.00

Gulf, Texas

5.39

5.42

7.00

SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

LOCATION

SEP 30, 2013

SEP 3, 2013

SEP 4, 2012

NYMEX

3.56

3.67

2.85

NNG Ventura

3.43

3.61

2.67

CA Citygate

3.62

3.88

3.02

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production

(1,000 barrels)

PER DAY

MONTH

END STOCKS

JUL 2013

868

26,923

17,127

JUN 2013

891

26,722

16,395

JUL 2012

814

25,236

20,224

SOURCE: U.S. Energy Information Administration

NOVEMBER 2013 | Ethanol Producer Magazine | 25


DISTILLED Atlantic Canada shows promise for advanced ethanol production

Ethanol News & Trends

Court upholds California LCFS

The U.S. 9th Circuit Court of Appeals has ruled that California’s low carbon fuel standard (LCFS) program is constitutional, overturning a prior ruling that it violates interstate commerce laws. A panel of three judges made the ruling in September, vacating a preliminary injunction made by the district court. Rulings issued by the district court in December 2011 found that the LCFS facially discriminated against out-of-state ethanol, impermissibly engaged in the extraterritorial regulation of ethanol production, and discriminated against out-of-state crude oil, and was not saved by California’s preemption waiver in the Clean Air Act. However, the opinion published by the appeals court has reversed that finding. One judge in the panel dissented to a portion of the ruling stating that the state has failed to demonstrate that a nondiscriminatory version of the regulation would be unable to achieve its legitimate local interest of reducing greenhouse gas emissions. Growth Energy and the Renewable Fuels Association are among the plaintiffs cited in court documents. In a joint statement, the RFA

The Atlantic Council for Bioenergy Cooperative, in partnership with BioAtlantech New Brunswick, has released a report exploring the potential to develop a biofuels industry in Atlantic Canada. The report, titled “Fueling the Future: Atlantic Canada’s Bioenergy Opportunities Project,” finds that biofuel production in the region could generate $1.5 billion in gross domestic product, $273 million in tax revenues and 10,000 jobs over five years. While the report specified Atlantic Canada would have to produce about 250 million liters of ethanol to meet its renewable fuel goals, the market potential is significantly greater as regional feedstocks, such as sugar beets, could be used to produce fuel to meet U.S. renewable fuel standard (RFS) mandates. The report also discusses a tool developed by Gardner Pinfold Consultants Inc. that is designed to assess the financial viability of a project based on feedstock, plant scale, preconstruction and construction costs, financing, operational costs and revenues.

and Growth Energy said they are evaluating both the decision and the dissent and are contemplating all legal actions.

Pacific Ethanol Stockton AE Advanced Furls Keyes Pacific Ethanol Madera

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Advanced ethanol plant to break ground in California

California Ethanol & Power LLC is one step closer to producing advanced ethanol following a Sept. 10 meeting of the Imperial County Board of Supervisors. During the meeting, board members of the Californiabased district voted to approve seven resolutions related to permitting, zoning, water and other issues related to the project. David Rubenstein, chief operating officer of CE&P, called the board’s action the “last of the permitting hurdles.” The project is expected to break ground late this year or early next year, with operations beginning approximately two years later. Once complete, the facility will have the capacity to produce 66 MMgy of ethanol from sugarcane and sweet sorghum feedstocks, along with 49.9 MW of renewable power and 940 million cubic feet of biogas. The ethanol plant will feature off-the-shelf Brazilian technology that is adapted to meet California’s stringent clean air and water standards.

EU biofuels vote prolongs policy uncertainty Members of the European Parliament voted on draft legislation Sept. 11, calling for a 6 percent cap on first-generation biofuels and a swift transition to second-generation renewable fuels. The Renewable Energy Association said the series of tight votes will prolong instability in biofuel policy, noting that a 2.5 percent target for advanced biofuels, double counting for biofuels made from cooking oil and tallow and a 7.5 percent limit on ethanol in gasoline blends were also approved. In

addition, MEPs voted to keep accounting for indirect land use change (ILUC) factors. However, under the complex rules of the European Parliament, the matter is not finalized. A statement issued by the parliament explains that MEP Corinne Lepage was two votes short of receiving a mandate to negotiate with member states, who will now seek a common position on their own. In effect, a final decision on the matter could be postponed until next year.

European Ethanol Feedstock Use (in million metric tons)

Wheat Corn Barley y Rye Sugar Beet

2010

2011*

2012*

2013** 2014**

4.111 2.589 0.658 1.138 9.915

4.368 3.073 0.875 0.685 8.927

4.195 4.215 0.387 0.453 9.206

4.64 4.97 0.54 0.48 9.47

* Estimated SOURCE: USDA FAS GLOBAL AGRICULTRIAL INFORMATION NETWORK EU-27 BIOFUELS ANNUAL REPORT

5.08 5.03 0.615 0.5 9 ** Forecast


DISTILLED

PEI estimates E15 conversion costs The Petroleum Equipment Institute recently published estimates of the cost to convert a fuel station from one that dispenses E10 to one that supplies E15 in response to a request made by the USDA. The estimates are based on a survey of PEI members from across the nation. Depending upon the specific upgrades needed and the number of fuel pumps present as a particular station, the estimates spanned from as low as $1,000 per station for an upgrade that requires only labeling

and signage changes to just over $320,000 to retrofit a 10-pump station that requires existing dispensers and hanging hardware to be replaced, along with a new underground storage system. The PEI’s analysis includes estimates addressing several scenarios, including the need to replace above ground and underground equipment. The institute also compares the cost to build a new station that supplies blends of up to E10 with one that supplies E15.

States with Stations Offering E15 SOURCE: Renewable Fuels Association

28 | Ethanol Producer Magazine | NOVEMBER 2013

Advanced biofuel stakeholders unite in Omaha In September, the National Advanced Biofuel Conference & Expo brought members of the biofuels industry together in Omaha, Neb. Michael McAdams, president of the Advanced Biofuel Association, kicked off the opening session of the event with a simple, but powerful message—now is the time to unite. McAdams urged all members of the biofuels industry, whether first-generation biofuels, cellulosic biofuels or drop-in fuels, to work together to protect the industry that has been built over the past 30 years, particularly the renewable fuels standard (RFS). The event also featured updates on cellulosic ethanol products delivered by representatives of Abengoa Bioenergy S.A., Poet-DSM Advanced Biofuels LLC and Ineos Bio. A preconference event, the Corn Stover Harvest & Transport Seminar, addressed the technological, logistical and environmental issues of using corn stover as an advanced biofuel feedstock, while industry tours highlighted the colocated BioProcess Algae production facility and Green Plains Renewable Energy ethanol plant.


DISTILLED

Midori plans demonstration plant

Ethanol producers receive advanced biofuel payments

Flagship VentureLabs has announced that Midori Renewables is globally deploying its trademarked Breaking the Biomass Barrier technology, which features a novel catalyst that converts non-food biomass into sugars. The catalyst is a solid material, not an enzyme, micro-organism or acquesous acid. The company says it can easily be separated from the reaction and reused, which reduces costs. Midori has been testing its technology over the past year in a variety of markets, including the biofuels and renewable chemicals sectors. The company was issued two foundational U.S. patents on its catalyst technology and has more than 10 additional families of patents pending worldwide. "We evaluated hundreds of technologies before we invented our own solid catalyst, which is truly an innovative way to produce ultra-low cost sugars for sustainable biobased products," said Brian Baynes, founder and chairman of Midori and partner at Flagship VentureLabs. Midori plans to construct a commercial demonstration facility next year and is currently in partnering discussions with engineering, procurement and construction firms.

The USDA recently announced a new round of payments to biofuels producers under the Advanced Biofuel Payment Program. USDA Rural Development Acting Under Secretary Doug O’Brien made the announcement in September on behalf of Agriculture Secretary Tom Vilsack at the National Advanced Biofuels Conference & Expo in Omaha, Neb. According to the USDA, nearly $15.5 million

was awarded to 188 producers through this round of funding, including payments to more than a dozen ethanol producers located in California, Indiana, Kansas, Missouri, Nebraska and Texas. The Advanced Biofuel Payment Program was established by the 2008 Farm Bill. It makes payments to eligible biofuel producers based on the quantity of advanced biofuel produced from renewable biomass, other than corn starch.

Ethanol Companies Awarded $100,000 or More in Payments Company

Location

Payment

Prairie Horizon Agri-Energy LLC Bonanza Bioenergy LLC Diamond Ethanol LLC Western Plains Energy LLC Arkalon Ethanol LLC Kansas Ethanol LLC White Energy Inc.

Kansas Kansas Kansas Kansas Kansas Kansas Texas

$159,910 $162,913 $247,214 $267,460 $275,068 $288,723 $757,398

SOURCE: USDA

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NOVEMBER 2013 | Ethanol Producer Magazine | 29


PROFILE

Future Feedstock A pickup load of tree trimmings turns in at the Indian River BioEnergy Center in Indian River County, Fla. The company gets paid a tipping fee to accept vegetative waste from a two-county area. PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

30 | Ethanol Producer Magazine | NOVEMBER 2013


PROFILE

A WASTE-FILLED

PROPOSITION Ineos Bio brings the first commercial cellulosic ethanol plant in the U.S. online in Florida. STORY AND PHOTOS BY SUSANNE RETKA SCHILL

Driving south from Vero Beach, Fla., on a warm August day to tour the new cellulosic ethanol plant, the mounting problem of waste becomes clear. The Indian River BioEnergy Center, a project of Ineos New Planet BioEnergy LLC, lies a few miles inland on the flat landscape along Florida’s Atlantic coast. The only hill in sight is the grass and soil-covered mound of accumulated waste at the Indian River county landfill. Today, when local citizens drive up to the landfill to dispose of tree trimmings and other vegetative waste, they are sent a mile down the road to the biorefinery. Pickups, contractor trucks and municipal garbage trucks weigh in and back up to dump their loads. Residents of the two participating counties don’t have to pay, since their yard waste is covered by taxes, while others pay a tipping fee. Ineos Bio gets paid for accepting its feedstock, diverting about 100,000 tons of waste streams that were formerly landfilled and turning them into bioenergy, 8 MMgy cellulosic ethanol and 5 megawatts of electrical power. The management team at Ineos Bio is bemused by other differences between the petrochemical projects they’ve worked

NOVEMBER 2013 | Ethanol Producer Magazine | 31


PROFILE on in the past and this first-of-its-kind waste-to-bioenergy plant. “I’m used to building in places like Houston where you have mile upon mile of industrial plants,” says Chief Operating Officer Mark Niederschulte. The cellulosic ethanol plant is located a couple of miles south of Vero Beach and even though it’s just a mile away from the landfill, the company was asked to landscape the grounds following guidelines established for shopping centers, since there weren’t guidelines for biorefineries. Workers have planted about 10,000 individual trees, shrubs and perennials on the 70-acre site. The biggest, most obvious difference from a petrochemical plant is that instead of receiving crude oil feedstocks from a pipeline—a fungible, commodity feedstock—the Indian River biorefinery feedstock yard handles a steady stream of trucks of all sizes. “We’re getting feedstock 24 hours a day, seven days a week and closed just four days a year,” Niederschulte says. The product marketing side is similarly a contrast. Instead of arranging large, 30,000-metric-ton-plus shipments of prod-

uct around the world, Niederschulte says, there is a ready market for every drop of cellulosic ethanol at four Florida terminals located within a hundred miles of the plant. He points out that while everything about the front end and back end—incoming feedstock and outgoing product—is as different as night and day, everything in between is a chemical plant.

Shifting From Petro To Bio

Like Niederschulte, many in the Ineos Bio team moved over from the company’s petrochemical divisions to work on the renewable energy project. The Switzerlandheadquartered Ineos Group is a relatively new company, having been formed in 1998 to purchase refining assets in Europe. In a series of acquisitions, Ineos purchased technology rights and production facilities from companies such as Dow Chemicals, Rhodia, BASF, Chevron, Phillips, Monsanto, Hoechst and, in 2006, BP Chemicals. Sales the past two years have topped $43 billion from the 15 business segments that manufacture a wide range of polymers and chemical intermediates. The production

network spans 51 manufacturing facilities in 11 countries. Like many other companies in 2005 and 2007, Ineos began evaluating technologies as Congress debated the energy program that launched the renewable fuel standard. In 2008, Ineos purchased a conversion technology from Bioengineering Resources Inc. and its pilot facility in Fayetteville, Ark. The BRI process design was worked out in more than 40,000 hours of operation since 2003 at the fully integrated pilot plant, using a wide variety of feedstocks. Development actually began more than a decade earlier, however, when University of Arkansas Professor James Gaddy first isolated the ethanol-producing organism in work that was patented in 1992. BRI’s technology has been followed through the years by Ethanol Producer Magazine. In 2007, one company in the first class of cellulosic ethanol projects funded by the U.S. DOE planned to license the BRI conversion technology. A year later, Alico Inc., the LaBelle, Fla., project sponsor canceled the project. Also in 2007, a BRI representative described BRI’s work at the

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PROFILE International Fuel Ethanol Workshop & Expo, saying the patented anaerobic bacterium, Clostridium ljungdahlii, was converting 95 to 98 percent of any combination of carbon-based waste to yield at least 75 to 85 gallons of ethanol per dry ton of biomass. Niederschulte explains that in his work at BP Chemicals and elsewhere, he has been involved with six new technologies that each required 15 to 20 years to commercialize. Ineos purchased the BRI

technology because it was the closest to commercialization, and its progress has followed a typical trajectory. When the technology rights and Arkansas pilot facility were acquired five years ago, Niederschulte says they focused the work on two technologies—biomass gasification and the microbial fermentation into ethanol. The goal has been to develop an efficient gasification unit with maximum energy integration and to optimize the environment for the microbial fermentation of syngas Continued on page 36

Feedstock Trucks of all sizes dump loads that range from green tree trimmings to discarded shipping pallets. All are shredded and piled to dry in the Florida sun. One task of the year-long commissioning process at the Indian River BioEnergy Center was to experience all seasons of Florida, and in particular learn how best to handle feedstocks in the rainy season. The largest area of the 70-acre site is devoted to feedstock handling and storage. The shredded and air-dried biomass shown in the top photo is trucked from one side of the property to the open-sided, roofed shed shown below. The biomass is dried further utilizing low-grade heat recycled from the gasifier unit to prepare the material for gasification.

NOVEMBER 2013 | Ethanol Producer Magazine | 33


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PROFILE

minutes

required from when biomass enters the gasifier and exits as ethanol

Gasification

The Ineos Bio gasification process is a two-step, oxygen-blown technology that converts the prepared, dried biomass into a synthesis gas. Feedstocks of different bulk density, particle shape and size may be mixed together to optimize feed rate into the unit pictured below and minimize entrained air, the company says. Upon exposure to the heat in the lower chamber of the gasifier, further drying takes place followed by pyrolysis, generating a pyrolysis gas which passes through to the upper chamber where it is mixed with more oxygen, generating more heat from partial combustion. The high temperature and residence time cracks the pyrolysis gases to carbon monoxide, hydrogen and CO2. The oxygen-blown gasification technology used in the INEOS Bio process suppresses the formation of dioxins and furans, thanks to the reducing environment in the gasifier, and destroys any dioxins and furans formed through exposure to high

wabash

34 | Ethanol Producer Magazine | NOVEMBER 2013

temperature and residence time in the upper part of the gasifier. In addition, the carry-over of volatile metals into the syngas is minimized. No tars or aromatic hydrocarbons are present in the syngas, thus the design reduces the burden on, and cost of, the syngas clean-up stage. The gasifier also operates at slightly negative pressure to prevent the escape of gases to the environment. “There is know-how in biomass gasification,” says Ineos Bio CEO Peter Williams. “There was a lot of development required for the gasification technology.” Once the gasification process is complete, the hot synthesis gas is quenched and cleaned. The recovered heat first generates renewable electricity, and the remaining energy is utilized in other processes. Once operating, the gasification process provides all of the facility’s energy needs with a surplus of between 1 and 2 megawatts exported to the grid.


PROFILE

Fermentation At the heart of the Ineos Bio process are patented bacteria. The naturally occurring anaerobic microorganisms evolved to efficiently convert carbon monoxide and hydrogen gases generated in their natural environment to ethanol. The cleaned, cooled synthesis gas is passed into the patented fermentation process, where the bacteria are maintained in the carefully controlled environment. The fermenter is agitated to aid gas-liquid transfer. The Ineos Bio fermentation process takes only a few minutes at low temperature and pressure and with high yield and selectivity. The high performance, coupled with tolerance to variations in syngas composition and to common catalyst poisons means fewer process steps, high-energy efficiency. Nutrients are added to provide for cell growth and automatic regeneration of the biocatalyst. The proprietary combination of microorganism, nutrients, process design and conditions produces ethanol at a commercially attractive and competitive cost. Ineos Bio literature explains the maximum theoretical yield for the process is about 135 gallons of ethanol per dry ash-free ton of material and reports it measured yields ranging from 75 to 100 gallons per dry U.S. ton. One reason for the higher yields than those typically achieved by processes using acid or enzymatic hydrolysis followed by fermentation is that the gasifier converts the lignin, pentose, protein and other carbon-containing fractions of the biomass into syngas for the microbes to convert. The inorganic fraction and the moisture content are discounted when making the yield calculations. Most of the syngas is converted to ethanol and any unconverted, vent-gas is cleaned and combusted to generate additional renewable power. The fermenter liquid is continuously extracted, filtered to remove bacteria and nutrients, and then goes through a standard distillation process followed by dehydration with molecular sieves. Steam generated by recovering heat from the gasification process provides the energy for distillation. Water from the distillation column is recycled back to the fermenter. NOVEMBER 2013 | Ethanol Producer Magazine | 35


PROFILE Continued from page 33

into ethanol. The time needed for the biomass to enter the unit and exit as ethanol is less than 10 minutes. Other systems used at the Indian River biorefinery were well-established technologies purchased from others, such as the oxygen purification system from Air Products and distillation unit from Vogelbusch. The Indian River biorefinery is a joint venture between Florida-based New Planet Energy Florida LLC and Ineos Bio. The $130 million project received a $50 million U.S. DOE matching grant in December 2009. AMEC received the engineering

‘When you’re building new technology, the interface with noncore items and core technology are important, and they need to be right. There is usually a shakedown period to get all that right because it’s the first time you’ve put the thing together.’ —Ineos Bio CEO Peter Williams

and procurement contract in 2010 and following the announcement of a $75 million USDA loan guarantee in January 2011, a groundbreaking ceremony was held a month later. Construction was completed in mid-2012 and commissioning began. The company announced in November that it was producing renewable power and 10

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36 | Ethanol Producer Magazine | NOVEMBER 2013

months later the plant was fully online and producing ethanol.

2 Issues With New Technologies

For those familiar with the heyday of the corn ethanol build-out, when plants were being completed and commissioned in a matter of weeks, taking a year for commissioning might raise an eyebrow. “It’s not surprising,” explains CEO Peter Williams. “There are two types of issues you deal with bringing on new technology and these are not unexpected issues. One is the interface with the site, the location you are in—noncore technology items.” An example would be dealing with Florida’s weather. “They get 12 inches of rain here and think nothing of it,” Niederschulte points out. The Indian River site, formerly a grapefruit processing facility, has a canal and several water ponds to deal with the runoff but there was a learning curve on the best practices for dealing with feedstock processed and stored in the open. Another example of site-interface is the coordination between the electric utility and the biorefinery’s generator. Once there was a voltage dip in one of Florida’s frequent thunderstorms, Niederschulte recalls. “Our turbine saw that and shut down to protect itself. And we want it to protect itself. But if it shuts down, we can’t instantaneously start back up.” After the engineers improved the communications between the two systems, that problem was solved. “When you’re building new technology, the interface with noncore items and core technology is important, and they need to be right,” Williams says. “There is usually a shakedown period to get all that right, because it’s the first time you’ve put the thing together.” “The other side is learning how to drive, really,” he continues. “The unit operations are doing what we’ve expected them to do. You don’t get everything from a pilot plant. That tells you an enormous


PROFILE amount about the technology and gives you the confidence to build the first plant, but there are still unknowns that you have to learn. The second area is learning those unknowns, incorporating them and moving on.” Williams adds that as the CEO of Ineos Technologies, he has seen the licensing of 40-some petrochemical technologies to experienced operators. “Our customers say four years on average to build a plant, even knowing the site. In that context, [the Indian River biorefinery timeline of five years] doesn’t look abnormal at all. It looks pretty quick, and we are pleased with our team.” “Everything we’ve done validates our views of the technology,” Williams says. “It reinforces our view of it being a very attractive value proposition as a technology for converting waste materials into bioethanol and power.” “We’re still learning the value proposition,” Williams adds. For a company more familiar with the petrochemical industry, turning waste into energy means it must learn about a community, just as the community must learn about having a process industry in its backyard. For a company used to working in the world of petrochemical refineries, dealing directly with consumers is new. Communities always welcome quality jobs, but much of the value proposition is about dealing with waste, particularly for a community facing the closing of a landfill. The Indian River biorefinery accepts vegetative waste from about 170,000 area residents. While that is the initial feedstock, the plant is permitted to use municipal solid waste and the company has successfully tested multiple feedstocks at the Arkansas pilot facility. “The organism was fed a wide range of carbon feedstocks,” Niederschulte says, including every type of vegetative waste all the way to fossil-fuel based products like tires. “It really doesn’t seem to care. The gasifier unit reduces it to carbon monoxide and hydrogen. If you can gasify it, we can use it.” “To our surprise, where petrochemical producers want big, big, big, the people we’re talking to say ‘I’ve got this amount of waste,’” Niederschulte says. “Of the conversations we’ve had to date, the largest has been three-times Vero, which would be 24

MMgy.” Those inquiries are coming from all over the world, Williams reports, and no one region dominates. The Ineos Bio team has fielded inquiries from Europe, Africa, China, Brazil and North America. The next plant—which possibly will be built in Europe—won’t look exactly like the first, Niederschulte says. The size of the first was determined primarily by scaling up the unique syngas fermentation technology, with other components sized accordingly to match. Some of those components have been oversized while others will be beefed up in the next iteration. As operating experience is gained, maintenance needs may call for the addition of a platform or

additional space to bring in a crane when needed. Williams and Niederschulte say it will likely take five plants before most of the design issues are worked through, after which efficiencies of scale will be the goal. “What we think we can do well is to drive this through to commercial business,” Williams says. Along the way, the company will also learn the balance between the two value propositions—making bioenergy in the forms of ethanol and power and dealing with waste. Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922

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FEEDSTOCK

38 | Ethanol Producer Magazine | NOVEMBER 2013


FEEDSTOCK

TRASH

to BIO-TREASURE Two cellulosic ethanol developers are about to go prime time, turning garbage into biofuel at separate facilities in Canada and the U.S. BY HOLLY JESSEN

What’s valuable about an old T-shirt and a soiled cardboard Big Mac container? While most people think nothing of tossing these items out, waste-to-energy firms like Enerkem and Fiberight LLC have a plan to keep garbage like this out of landfills while producing alternative fuels. While there are a few other developers looking at producing biofuels from municipal solid waste (MSW), these two companies are the closest to actual commercial-scale production, each recently reaching significant milestones in that quest. Enerkem is first in line to complete its facility, with a 10 MMgy biofuel and renewable chemical plant being built in Edmonton, Alberta. In mid-September, the company expected to wrap up construction at the end of October, with a plant inauguration planned in the fall, says Marie-Helene Labrie, vice president of government affairs and communications for Enerkem. Initially, the facility will produce methanol, with cellulosic ethanol production expected in 2014. The company has a 25-year agreement with the city of Edmonton, which will supply 100,000 dry metric tons of sorted MSW yearly. Once the facility reaches full production levels, the city will reduce its landfill waste to only 10 percent of residential garbage by diverting feedstock for Enerkem in combination with a previously established recycling and composting program. Labrie called the project a world first, adding that it’s a good NOVEMBER 2013 | Ethanol Producer Magazine | 39


FEEDSTOCK example of how cities can transition to a greener economy. “This is part of our strategy and vision,� she says, “to not only offer a domestic energy solution but also help resolve waste management issues.� In eastern Iowa, Fiberight reached a 15year MSW supply agreement with the city of Marion in late August. The company is already working to retrofit a former cornethanol plant in nearby Blairstown, Iowa, which, when completed, will produce 6 MMgy of cellulosic ethanol from MSW processed in Marion, says Craig Stuart-Paul, chief executive of Fiberight. The goal is to start construction on a waste separation and recycling plant there by the end of the year. “We should be commissioning from about eight months from start of construction,� he says. The ethanol plant, on the other hand, is expected to begin production by about next summer. The company has put in requests for proposals for MSW supply agreements in several other cities around the U.S. “What we are seeing is, the municipal market is very, very interested in this as an option

for waste disposal,� he says. In midSeptember, a proposal was submitted to Iowa City, located in the same area of Iowa as Marion and Blairstown. Although Center of Excellence the MSW from Edmonton is a leader in waste management and Marion is sufficient visitors from around for commercial the world come to learn from its example, operation of the says Marie-Helene Blairstown ethanol Labrie, Enerkem’s vice president of plant, if an agreement government affairs and is reached with Iowa communications. City, the additional feedstock will be enough to take the plant to full capacity, he says. Both companies are utilizing feedstock models for which the cities supplying MSW pay a tipping fee for the ability to dispose of its waste. On the other hand, there are a few differences between the company’s approaches. While Enerkem will receive already separated and sorted MSW from the city of Edmonton, Fiberight will operate

the solid waste facility itself. In addition, Enerkem’s biofuel feedstock stream will contain some plastics. Fiberight, which is working with a different set of regulatory requirements under the U.S. renewable fuel standard, will not utilize plastics as an ethanol feedstock. Canadian Model Enerkem scaled up from its pilot plant to a 1.3 MMgy demonstration facility in Westbury, Quebec, with operations beginning in 2009, followed by methanol production in 2011 and cellulosic ethanol production in 2012. “We are very excited by the work we have done and all the steps we have taken from pilot to demo to now full-scale commercial facility,� Labrie says. Enerkem Alberta Biofuels LP, is co-located with the Edmonton Waste Management Center, where garbage and recycling from more than 324,000 singleand multifamily homes is processed. The city has had a recycling program in place for 25 years and 93 percent of single-family households participate

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FEEDSTOCK voluntarily, says Connie Boyce, director of community relations for Edmonton’s Waste Management Services. Residents put recyclable items, such as paper, cardboard, tin cans, glass and certain types of plastic, into blue bags. Garbage, such as food waste, yard waste and smaller household items, go into a separate can or bag. Currently, 60 percent of the total amount collected is diverted from being trucked more than 40 miles to a landfill, due to the fact that Edmonton’s landfill ran out of space and closed in 2009. By about 2016, when the Enerkem facility is expected to be producing at full strength, the city expects to increase that to a 90 percent diversion rate, Boyce says. The city sells recyclable materials, using the revenue as a small portion of its operating budget, she adds. The garbage is separated into three streams, including organic material, which is sent to a composting facility, where agricultural or residential and business landscaping products are produced and sold as another revenue source. Other materials will go to the refuse-derived fuel

Mountains of Trash The city of Edmonton, Alberta, sorts trash for composting, biofuels feedstock and landfill at its integrated processing and transfer facility. PHOTO: CITY OF EDMONTON

facility where it is shredded for Enerkem’s use as a biofuel feedstock. The remaining portion that is not recyclable, organic or useable by Enerkem is sent to the landfill. What, specifically, are the types of items Enerkem will receive as feedstock

Why take the good with the bad, when you don’t have to?

material? The list starts with paper and cardboard products that can’t be recycled, perhaps because they are soiled, Labrie says. Other examples include wood, old clothing, worn out shoes and broken plastic toys, an example of a type of plastic that cannot

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FEEDSTOCK

‘It is a challenge, because of the fact that MSW has got a lot of things in it. But it is also an opportunity because you can derive value from many of those elements as possible.’ —Craig Stuart-Paul, chief executive of Fiberight

Nearly There Construction on Enerkem Alberta Biofuels LP, a 10 MMgy biofuel and renewable chemical plant in Edmonton, Alberta, nears completion in this aerial shot taken Sept. 9. PHOTO: ENERKEM

be recycled but can be broken down into biofuels. “It’s really a mix,” she says. The company is pleased to have the opportunity to work with Edmonton, a North American leader in waste management. “It’s really a center of excellence for waste management,” she says. “There are visitors from around the world that are coming to visit what the city of Edmonton has implemented as well as their partnerships with private companies like ours.”

P ROCESS

American Made Fiberight’s Lawrenceburg, Va., 500,000 gallon a year demonstration plant has been producing cellulosic ethanol for 3,000 hours. Although the company announced in August 2012 that it planned to double the capacity, Fiberight later decided it had already hit its mark at that facility and elected instead to focus on fine-tuning its integrated technology in preparation for building its first commercial plant, StuartPaul says. In January 2012, the USDA announced

ENGINEERING ,

A

E QUIPMENT S UPPLY ,

AND

Fiberight was the recipient of a conditional commitment for a $25 million guaranteed loan. In order to reach the loan guarantee phase, the company had to satisfy some significant requirements, which it has now achieved. Stuart-Paul is hopeful that it will move from the conditional to loan guarantee phase by the end of the year, he says. One prerequisite for that was to prove out every element of its demonstration plant, from its MSW sorting and separation process to production of cellulosic ethanol. After going through that process, StuartPaul agrees that it was a valuable exercise. “We learned an awful lot of lessons, hardfought lessons, along the way,” he says. “And we were able to overcome a lot of the problems at a smaller scale than if we had just gone ahead and built the full-scale plant from a pilot plant.” Another requirement for the pending loan guarantee was U.S. EPA approval of the company’s separation plan, which happened in August 2012. The separation plan identifies 10 technologies and practices

C ONSULTING S E R V I C E S

HISTORY OF EXCELLENCE FOR OVER

90

YEARS

Vogelbusch USA, Inc. www.vbusa.com (713) 461-7374 42 | Ethanol Producer Magazine | NOVEMBER 2013


FEEDSTOCK for sorting recyclables from MSW, including shredding, washing, air separation, optic sorting and more. “We are very much focused around the front-end recycling and recovery of the materials and particularly plastics,” he says. “I think that’s one thing some other people have had challenges with, how do you keep the plastics out of the cellulosic ethanol? Our position is that it’s possible to do so.” Anything that can be recycled, such as many types of plastics, glass, metal, clean cardboard and paper, will be separated and sold as an additional revenue stream. Other materials, such as yard waste, craft paper and cardboard that isn’t clean enough to be sold as recyclable grade, will go to the ethanol plant in Blairstown. Food waste will end up in the anaerobic digester at the Marion facility to produce compressed natural gas (CNG), which can be marketed as a transportation fuel, including to the fleet belonging to the city of Marion, he says. The fourth and final garbage fraction is what goes to the landfill, such as cat litter and dust. According to the EPA document outlining Fiberight’s separation plan, 70 percent of the trash will be recovered. However, based on Fiberight’s work at its demo plant. Stuart-Paul believes the number will be closer to 80 percent. It took a long time to perfect the separation process and get EPA approval, he says. With that completed, the company has

Trashanol Fiberight’s 500,000 gallon a year demonstration plant in Lawrenceburg, Va., is a fully integrated operation, from MSW separation to cellulosic ethanol production. PHOTO: FIBERIGHT

the advantage of multiple revenue streams, including from recycling various materials as well as production of ethanol and CNG. “It is a challenge, because of the fact that MSW has got a lot of things in it,” he says. “But it is also an opportunity because you can derive value from many of those elements as possible.” The whole idea is to take a problem, the disposal of trash, and turn it into something useful. The company is working to trademark the name Trashanol, to highlight the fact that the ethanol it will

produce will come from items tossed in the trash. “It’s a remarkable amount of energy that was previously just thrown in a landfill and it broke down to methane. And methane is a big contributor to greenhouse gas emissions,” he says. “It’s 24 times worse than CO2.” Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-783-4946 hjessen@bbiinternational.com

NOVEMBER 2013 | Ethanol Producer Magazine | 43


INAUGURATION

Grand Celebration Thomas VidebĂŚk, executive vice president of business development for Novozymes, speaks at the inauguration event held in Italy on Oct. 9.

From Model To Full Scale Guido Ghisolfi, chairman and CEO of Beta Renewables, right, shows Italian government officials a model of the company’s cellulosic ethanol plant. 44 | Ethanol Producer Magazine | NOVEMBER 2013

Open For Business The Beta Renewables cellulosic ethanol plant will produce 20 MMgy from wheat straw, rice straw and arundo donax, a high-yield energy crop that is grown on marginal land. PHOTOS: BETA RENEWABLES


INAUGURATION

Industry First A nearly 20 MMgy cellulosic ethanol facility in Crescentino, Italy, officially opened in early October, making it both the first and the largest commercial-scale facility of its kind in the world. BY HOLLY JESSEN

Hundreds of people gathered Oct. 9 for the inauguration of the Beta Renewables facility in Northern Italy. The plant, which converts wheat straw, rice straw and the energy crop arundo donax into cellulosic ethanol, was mechanically completed in 2012 and will reach full capacity by the end of the year, according to Beta Renewables’ Chairman and CEO, Guido Ghisolfi. “At the moment we are producing on-spec ethanol with the right quality and right yields.” In the three weeks leading up to the official opening, the company hosted at least two tours daily. What visitors see is a plant that is producing commercial qualities of ethanol. “The most interesting visitors are the ones that were skeptics,” he tells Ethanol Producer Magazine. “The ones that thought we would never build a plant of this capacity and the plant would never be on-stream and the plant would never get yields.” Among those attending the celebration were customers from Eastern and Western Europe, North America, South America and Asia. “The interest is very, very high,” Ghisolfi says, pointing to a licensing agreement with GranBio, to build Brazil’s first cellulosic ethanol plant using Beta Renewable’s trademarked Proesa technology. More is yet to come. “We are now in the process of signing three more licenses, one in Columbia, one in the United States and Eastern Europe,” he says, “and this will happen before the end of the year.” A year ago, Beta Renewables formed a strategic partnership with Novozymes, making the company the preferred enzyme supplier for current and future cellulosic projects. “The opening today presents a leap forward and is truly the beginning of a new era for advanced biofuels,” says Peder Holk Nielsen, CEO of Novozymes. “Here, at this plant, enabled by Novozymes’ enzymatic technology, we will turn agricultural waste into millions of liters of low-emission green fuel, proving that cellulosic ethanol is no longer a distant dream. It is here, it is happening, and it is ready for large-scale commercialization.” Ghisolfi agrees, saying the advanced biofuel industry is at a tipping point. Not limiting himself to mentioning only his own company, Ghisolfi named DuPont, DSM and Raizen as examples of large corporations financially backing projects that will come online after the Beta Renewables plant. “Before, the story was, there’s no technology. Then the story was, there is technology but it’s not guaranteed,” he says. “Then, it’s guaranteed but not from the right size company, so how can we invest?” But clearly the situation has now changed. “In 2014, you will see the startup of several plants in the United States and Brazil, and all those plants are guaranteed and supported by large corporations. … We are just the first but there are other companies that are coming after us.” Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

NOVEMBER 2013 | Ethanol Producer Magazine | 45


CELLULOSE

CONTRIBUTION

Demystifying Cellulose A primer outlinines the inherent challenges for biofuel production using biomass BY SCOTT MOWREY

Raw cellulose from plant biomass is composed of six classes of materials with varying percentages and widely different physical and chemical properties: cellulose, hemicelluloses (five carbon sugar chains), lignins, ash, protein and water. Plants harvested later in maturity will have lower protein content and crop residues will have the lowest of all. Since cellulose is the glucose polymer, it is sometimes referred to as glucan. The hemicelluloses are

polymer chains of the five (pentose) and six (hexose) carbon sugars of various orientations and are designated by the base sugar name plus the “an� ending. Lignins are not at all chemically related to carbohydrates and are composed of various forms of propanyl substituted phenolic ring compounds. A common analysis for switchgrass composition is shown in the accompanying table. Air-dried forage crops would usually equilibrate in open air around 10 percent.

The hemicellulose components, arabinan to mannan, comprise over 25 percent of the dry basis matter available and 45 percent of the fermentable material available and are therefore an important component to include in the process mix.

Structure of Cellulose

Reducing cellulose to its raw components is a challenging venture. The natural function of plant biomass to provide struc-

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

46 | Ethanol Producer Magazine | NOVEMBER 2013


CELLULOSE

CONTRIBUTION

ture and environmental resistance to sition. Examples include arabinose/ the elements is the same characteristic arabinan, xylose/xylan, mannose/ that makes it difficult to process. Sevmannan, etc. % of eral layers of protection have evolved Component Dry Basis over the course of time. At the cenMegamolecule Lignin ter of the biomass strand complex are Attached at various sites, along Glucan (Cellulose) 32.3 Arabinan 3.5 cellulose polymer chains composed only the outside layer of the celGalactan 1.3 of end-to-end glucose monomers atlulose strand complex are the very Xylan 21.4 tached in a 1-4 ring configuration. amorphous megamolecules of lignin. Mannan <0.01 Starch, which is easier to hydr zoLignin is hydrocarbon in structure Lignin (acid soluble) 3.4 lyze, has both 1-4 and 1-6 ring linkages comprised of carbon and hydrogen Lignin (acid insoluble) 23.3 creating a noncrystalline (amorphous) in aromatic ring structures and short Ash 3.7 structure. This opens sites for enthree-carbon (propanyl) aliphatic zyme activity, hence the ability of enchains, possessing some double These same hydrogen bonds hold the sheets doenzymes such as alpha-amylase to effect of cellulose together so perfectly that ex- bonds but the majority being of a singlethe shotgun approach to breaking up and perimental observation with hydrogen iso- bonded structure. Oxygen is also present liquefying the starch molecule. Additional topes have shown that only hydrogen ions in the megamolecule in internal and exterstrength to the cellulose strand is gained in can transport themselves to the inner layers nal ether bonds, external ester bonds and the 1 to 4 linkage via a tighter and less flex- of the cellulose molecule. This is especially in internal hydroxyl groups substituted on ible angle than what exists in starch. amazing to contemplate when you consider the ring structures and propanyl chains. The that hydrogen ions are composed of only presence of oxygen on the order of 25 perStrong Hydrogen Bonds cent of the mass of the lignin molecule is one proton. A very small space, indeed! This rigid and consistent pattern creCellulose strands consisting of glucose what leads to poor Btu content when comates a crystalline structure with repeated pared to traditional fuel sources. monomers are also referred to as glucans. patterns that lead to the ability for these Lignin can be typified in general as arochains to form sheets of cellulose strands. Weakly Attached Hemicelluloses matic substituted propyl alcohols. GymnoThese rigid sheets allow cross-sheet hydroThe hemicellulose component of the sperm lignin (pine species) contain mostly gen bonding to occur between the hydro- biomass complex is composed of various coniferyl alcohols, angiosperms contain gen and oxygen atoms of different layers five- and six-carbon sugars in chains of coniferyl and sinapyl alcohols, and grass ligcreating a very tight and formidable bond varying lengths and composition. They do nin is comprised of coniferyl, sinapyl and strength between sheets. This same hydro- not possess the regular pattern of cellulose paracoumaryl alcohols. The lignin molecule gen bonding is the property that gives water and are wrapped loosely around the cellu- is attached to the hemicellulose strand via its unique physical properties (such as high lose microfibril strands by way of glycosidic either ether or ester chemical bonds. Plant boiling point, high latent heat of vaporiza- bonds and to the lignin complex via ether species vary as to which is the more prevation, high freezing point and many others) and ester bond sites with the lignin mole- lent, for example corn stover possessing as compared to other hydrogen compounds cule. The hemicelluloses are the most weak- more ester bonded lignin and wheat straw in the oxygen family. An example of the ly attached of the biomass components and possesing more ether bonded lignin. strength of the hydrogen bond is the ex- are often easily removed with water in a first panding force created by water as it freezes step to process the biomass. As with glucose Pretreatment Approaches to ice, a phenomenon that occurs due to a and glucan in cellulose, the hemicellulose Acid hydrolysis, the oldest of pretreatreduction in the hydrogen bonds that hold chains are designated with the base sugar ment methods, breaks the ether bond by inthe same mass of water in a smaller volume. and the “an� ending to denote their compo- serting a water molecule in the gap. Sulfuric

Switchgrass Analysis

NOVEMBER 2013 | Ethanol Producer Magazine | 47


CELLULOSE

CONTRIBUTION

Cellulosic ethanol from agricultural residues THINK AHEAD, THINK SUNLIQUIDÂŽ

Highly efficient sunliquid is an economic and sustainable process to generate biobased products from lignocellulosic biomass. It opens up new feedstocks not only for fuel, but also for sustainable chemistry from untapped resources – like cellulosic ethanol from agricultural residues.

www.clariant.com www.sunliquid.com

acid is the acid of choice due to its ionization strength, industrial availability and price competitiveness. The difficulties in the acid hydrolysis process are from the unselective nature of the reaction, due to the fact that not only are the ether bonds between lignin and cellulose cleaved, but the potential to hydrolyze the 1-4 bond within the cellulose and hemicellulose strands is also present. The resultant mixture often adds challenges with the varying degrees of polymer chain monomerization that have occurred. In addition, the mix of water soluble, water insoluble and unconverted biomass further complicates the process stream. Finally, the need to neutralize the mixture for additional downstream processing adds expense and further complicates the components carried in the mix. Bases can also be used to hydrolyze the complex and tend to be more selective in the site attacked. Bases seem to attack only the ester bonded components. This also has been demonstrated successfully, but like acid hydrolysis still has the lingering problem of needing to neutralize the process stream for further downstream processing. Time and temperature control can optimize the conversion in an industrial setting. Both of these methods have their limitations. The field is ripe for a new idea and a fresh approach to the pretreatment process. Author: Scott Mowrey Alexandria, Ohio smowrey@embarqmail.com 740-334-0178

Editor’s note: This is an excerpt from a longer article that goes on to discuss pretreatment methods and the challenge of lignin. To read the complete article, view the November issue online at www.ethanolproducer.com.

48 | Ethanol Producer Magazine | NOVEMBER 2013


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16.

(1)

Outside County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources)

(2)

In-County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources)

(3)

Nonrequested Copies Distributed Through the USPS by Other Classes of Mail (e.g., First-Class Mail, Nonrequestor Copies mailed in excess of 10% Limit mailed at Standard Mail ÂŽ or Package Services Rates)

(4)

Nonrequested Copies Distributed Outside the Mail (Include Pickup Stands, Trade Shows, Showrooms, and Other Sources)

4,643

3,698

3,074

2,898

3

4

0

0

242

235

3,319

3,137

578

235

0

0

71

76

481

0

e.

Total Nonrequested Distribution (Sum of 15d (1), (2), (3) and (4))

1,130

311

4,449

3,448

f.

Total Distribution (Sum of 15c and e)

g.

Copies not Distributed (See Instructions to Publishers #4, (page #3))

h. i.

194

250

Total (Sum of 15f and g)

4,643

3,698

Percent Paid and/or Requested Circulation (15c divided by f times 100)

74.6%

90%

X Total circulation includes electronic copies. Report circulation on PS Form 3526-X worksheet.

17. Publication of Statement of Ownership for a Requester Publication is required and will be printed in the issue of this publication.

November 2013

18. Signature and Title of Editor, Publisher, Business Manager, or Owner

Date

9-23-13

Circulation Manager

I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties). PS Form 3526-R, August 2012 (Page 2 of 3)

Statement of Ownership, Management, and Circulation

(Only for Requester and General Category Periodicals Publications) PS FORM 3526 WORKSHEET If you are using PS Form 3526 and claiming electronic copies complete below: a. Paid Electronic Copies

NA

NA

b. Total Paid Print Copies (Line 15C) + Paid Electronic Copies c. Total Print Distribution (Line 15F) + Paid Electronic Copies

NA NA

NA NA

d. Percent Paid (Both Print & Electronic Copies)

NA

NA

NA

NA

I Certify that 50% of all my distributed copies (Electronic & Print) are paid above a nominal price.

PS FORM 3526-R WORKSHEET If you are using PS Form 3526-R and claiming electronic copies complete below:

363

335

c. Total Requested Copy Distribution (Line 15F) + Requested/Paid Electronic Copies

3,682 4,812

3,472 3,783

d. Percent Paid and/or Requested Circulation (Both Print & Electronic Copies)

76.5%

91.8%

a. Requested and Paid Electronic Copies b. Total Requested and Paid Print Copies (Line 15C) + Requested/Paid Electronic Copies

XI Certify that 50% of all my distributed copies (Electronic & Print) are legitimate requests.

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PRIVACY NOTICE: See our privacy policy on www.usps.com.


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